This month The Fintech Times is exploring paytech, meaning any technological innovation that changes the way we pay.
Throughout the month, we have focused on the latest payment innovations, upcoming payment trends and the overall future of payments. But now, we turn our attention back to the most well-established forms of payment and money: cash.
As the world embraces new forms of digital payments, concerns regarding where this leaves cash rise. As fewer people rely on cash, it is gradually becoming harder to access cash – with the number of bank branches and ATMs continually falling.
We reached out to experts in the space to find out their thoughts on the importance of access to cash.
The importance of access to cash
Ian Bradbury, CTO of financial services at Fujitsu UK and Ireland, explains: “With digital payments now such a part of our day-to-day lives, it’s easy to forget just how many people still rely on physical cash payments.
“Unfortunately, the reality is that not everyone has access to a device or the necessary knowledge to easily manage their funds digitally, and cash withdrawal remains essential for their survival. This creates an access gap, which involves marginalised groups like the elderly, those with disabilities and low-income earners to name a few.
“In fact, four in ten older people are not managing their money online and may be at risk of financial exclusion and 17 per cent of the UK – which is around eight million adults – would be unable to cope with a fully cashless system.”
‘Access to cash remains a fundamental pillar of financial inclusion’
Martin Heraghty, regional director Europe at Paymentology, commented: “We are observing a worldwide downward trend in ATMs provided by banks.
“However, access to cash remains a fundamental pillar of financial inclusion, owing to widespread usage throughout vulnerable groups in society. Recent research from the Payment Systems Regulator shows that 53 per cent of people over 75 prefer cash as their method of payment, reiterating the importance of continued access to cash, provided by both ATMs and physical bank branches.
“access to cash remains a fundamental pillar of financial inclusion, owing to widespread usage throughout vulnerable groups in society”
“Nevertheless, banks are choosing to rethink their investment focus. Whilst maintaining a combined web of ATMs and bank branches remains key, banks are collaborating with fintechs to scale back their physical presence. Partnerships with innovative technology providers are enabling banks to expand their digital offerings, improving their customer’s experience and offering a diverse range of financial services.”
‘The shift to digital payments has revolutionised financial transactions’
William Ip, head of payment methods (APAC) and country manager at Unlimit, explains how the importance of accessing cash may be diminishing: “Access to cash is becoming increasingly irrelevant in today’s world, particularly when it comes to travel.
“The days of relying on foreign currency and rushing to spend the last of it at the airport are long gone. Thanks to the convenience of digital payments, there is no longer a need to exchange money before embarking on a trip. During my recent travels to the UK, Cyprus, and Hanoi, I didn’t carry any local currency in my pocket. Instead, I relied solely on digital payment methods such as credit cards, mobile payment apps, and online banking.
“The shift to digital payments has revolutionised financial transactions, offering numerous advantages over traditional cash-based methods. Firstly, digital payments provide unparalleled convenience. With a few taps on a smartphone or a swipe of a card, payments can be made instantly without the hassle of carrying cash or worrying about exact change.
“Digital payments also offer enhanced security. Unlike cash, which can be lost or stolen, digital transactions leave a digital trail, making it easier to track and monitor expenses. Additionally, advanced encryption and authentication measures employed by many digital payment platforms protect financial information, minimising the risk of fraud or identity theft.
“The convenience, security, and widespread acceptance of digital payment methods have made credit cards, mobile payment apps, and online banking the go-to options for seamless and secure transactions worldwide. As digital payment technologies continue to advance, the importance of physical cash diminishes, making access to cashless relevant in today’s digital-driven world.”
The unbanked or underbanked
Megan Oxman, SVP of customer experience at Paysafe, reveals the importance of cash amid much discussion about cashless societies: “The growth of digital payments and alternative payment methods (APMs) like mobile and digital wallets has offered a great deal to merchants and consumers alike.
“Consumers get more choice, flexibility and swifter, more seamless payments, and merchants can differentiate their offerings by providing a more comprehensive, friction-free experience.
“However, the much-touted move to an entirely cashless society could have a severe impact on the most vulnerable, who risk further exclusion from the mainstream economy. Most cashless payment methods — including debit cards, credit cards, digital wallets, and mobile wallets — require access to banking facilities.
“A significant number of people around the world are still unbanked or underbanked. Many other consumers simply can’t rely upon digital payments. Perhaps they pay and are paid predominantly in cash, or find themselves in other circumstances that make using digital services impractical.
“the much-touted move to an entirely cashless society could have a severe impact on the most vulnerable, who risk being excluded further from the mainstream economy”
“While digital payments are a force for good for consumers and merchants, and their growth is unlikely to slow, progress shouldn’t come at the cost of marginalising anyone. This is why cash is still important, and emerging APMs like eCash, which allows users to pay cash online with either prepaid or postpaid payment methods, can offer consumers the benefits of digital payments, without exclusion.”
‘A portion of the UK population still struggles to adopt digital payment methods’
Finally, Jonathan Knott, head of customer insight at payment technology provider Dojo, also added: “The use of cash is reducing and accessing it is becoming more difficult, but this does not make it any less important.
“According to LINK, the total number of ATMs in the UK has fallen by six per cent from 2021 to 2022, and we have seen a huge decline in banks on our high street in the last two years with 1,405 reportedly closing.
“Data from Dojo collected over the summer reveals that there are several industries, particularly in personal services like nail salons, car washes, and taxi services, that remain hesitant to embrace digital payment options. Limiting access to cash, therefore, puts a wide range of small businesses and services in a difficult position, as they rely on cash transactions to generate revenue.
“Nevertheless, as the digitalisation of payments becomes an inevitable transition for both businesses and consumers, it’s essential to recognise that a portion of the UK population still struggles to adopt digital payment methods. This highlights the need for improved education regarding digital financial transactions, ensuring that everyone, regardless of age or familiarity with technology, feels confident in managing their money digitally.
“In doing so, more merchants and consumers will be able to reap the benefits of digital payments that so many already do by improving customer experiences and streamlining services with quicker sales and fewer queues, as well as minimised profit losses and risk of on-premise theft – all through the tap of a card.”